Swiss Re, the second-largest reinsurer globally, is focusing on strengthening its presence in India through micro insurance initiatives. In an interview with Somasroy Chakraborty and N Sundaresha Subramanian, Michel Liès, chairman (global partnerships), shares the company’s plans for India. Edited excerpts:
How do you plan to expand your operations in India?
In India, we are acting as a reinsurer. We have a commercial relationship office here, since according to regulations, we are not allowed to open a branch. The market is extremely important for us, though the premium volumes are not yet of the size we expect it to be in a country like this. For life, it is about $60 billion and a lot of that is in savings products. In property and casualty, it is approximately $10 billion. We are clearly a leader in life. We are perfectly aware that we are not a leader in non-life, because we believe prices are not what they should be. Globally, this is the case, whenever detariffing of rates takes place. We believe this would change soon.
Which are your focus areas in India?
In many states, there is a gap, as far as coverage is concerned. We are trying to address this issue at two levels, beside our classical activity, which is reinsuring insurance companies. We are helping micro insurance initiatives by our knowledge and trying to support these initiatives in health and agriculture. We are trying to complement this by a more macro approach, and are asking state governments whether they can take a cover for low-income groups.
Are micro insurance ventures sustainable over a long term?
Micro insurance is one of the few industries that I believe would have fewer clients as they become more successful. The aim is to help low-income people to have a positive view on insurance. Once these people view insurance in a positive manner and once their income level improves, they would be willing to buy classical insurance products.
How do you plan to reach low-income people in rural centres?
We cannot reach them on our own. We have to depend on the framework of insurance companies and other financial institutions like microfinance companies. We plan to bring our solutions and use our expertise in claim settlements. I think distribution is a challenge in rural centres. But we are optimistic, since people in these places are also able to get mobile phones.
Why did you exit your third-party administration (TPA) joint venture with TTK Healthcare?
What we had in mind for the partnership was collection of data for health insurance, and we achieved that. The rules for TPA have changed. Now, insurance companies in India can have their in-house TPA. So, the business value of this partnership was no longer what we thought it would be when we formed the partnership. But it helped us collect very interesting data, which we would always remember.
What are your expectations from the pending Insurance Bill?
For us, the main constraint is we are not allowed to open a branch here as a reinsurer. From the perspective of insurance companies, it is extremely important to allow up to 49 per cent foreign ownership. No consumer in any market suffered because the market was opened to global players.
Would you be interested in buying stake in an Indian insurance company?
We are interested in supporting players in the life insurance space. We have technology that we can bring to the table. We are not close to anything as far as buying stake in an Indian insurance company is concerned.